I like to define affiliate marketing as a partnership between a publisher who produces content and a retailer who has an affiliate program hosted by an affiliate tracking platform.
Upon approval to the affiliate program, the publisher can log in to the retailer’s affiliate platform and get unique product tracking links, commonly known as affiliate links.
There are over 31 ways to experiment and profit with affiliate links, such as placing them within written content, using them to create product listings, mentioning them verbally on podcasts or embedding them into banner advertisements.
Here’s an example of an affiliate banner and link on my site:
Any time a visitor clicks on one of those affiliate links and makes a purchase at the retailer’s site, the publisher is entitled to a commission from the retailer for helping them generate a sale.
The tracking behind affiliate links is handled automatically by the retailer’s affiliate platform. Any time a visitor clicks a link, a tracking cookie is stored on the visitor’s web browser that informs the retailer which publisher sent the visitor to their site.
Those cookies are valid for a set period of time (determined by the retailer) and I’ve seen windows as long as 365 days and as short as 1 hour. That means the publisher only gets paid if the visitor makes the purchase within that time period, although that window can be reset if the same visitor clicks the affiliate link again.
Besides affiliate links, publishers can get access to tracking reports (clicks, sales, impressions), additional promotional materials (banners, copy, email templates) inside the retailer’s affiliate platform. These platforms also handle commission payments so publishers can expect to be paid around the same time each month, usually by Paypal or direct deposit.
Here’s an example affiliate dashboard:
There are different types of Affiliate Marketing
Common types of affiliate marketing are Pay Per Click, Pay Per Sale, Pay Per Action.
Pay Per Click – Every time a potential customer leaves your website by clicking on the link to the merchant’s website, an amount of money is earned by the affiliate.
Pay Per Sale – Instead of paying for getting the potential customer to visit the merchant site they must actually make a purchase. The payment may be a percentage or flat rate and it may apply to any purchases for a period of time after visiting the merchant.
Pay Per Action – Payment may not depend on a sale but it will depend on the potential customer taking some action on the merchants website. This may include registering for a mailing list, taking a survey or some other agreed action.
Affiliate Marketing works well but it is not for everyone
Affiliate marketing can work very well but it does require work and may not be for everyone. Factors effecting your results include:
- Is your website getting enough traffic to get a volume of visitors to see your advertisements?
- Have you selected the right items to promote that will sell well and give a good commission?
- Are your advertisements enticing enough to get your visitors to click through and are they in the right mood to buy?
- If you are selling to an email list, is the list engaged enough to click through and purchase?
Why Sell Other People’s Stuff?
There are a number of Pros and Cons to selling other people’s products:
- Pro – One of the advantages of Affiliate Marketing is that you don’t have to worry about producing products, managing inventory or dealing with customers.
- Pro – You do not have to worry about the complexities of handling customer payment processing.
- Pro – You don’t have to wait until you have produced your own products before you can sell.
- Pro – You can promote products from a wide range of niches.
- Con – You need to make sure the merchant you deal with is reputable or you may find they get the sale and refuse to pay commission. Using an affiliate network can help vet both merchants and marketers.
Why do some merchants sell via affiliates?
Merchants can sell via affiliates to dramatically increase the reach of their advertising, in effect they have an army of sales people promoting their products. There are still pros and cons for Merchants:
- Pro – Payment is made for marketing that results in a sale (ie payment to the affiliate is usually only made after a sale).
- Con – There is a payment due on each sale that is made through an affiliate.
- Pro – The sale may not have happened without the affiliate marketer promoting your product. Affiliate sales can make a huge difference to the number of sales you may make.
- Con – There is a chance that Affiliates will use marketing techniques (spam etc) that is not consistent with the image the merchant wants to maintain.